Parabolic SAR - that's all!

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162

dpaterson, I just wanted to thank-you for reacquainting me with Parabolic SAR. About 6 months ago, I was using this same system. Results were very good, however I could not decide on where to place my stops. I also grew bored of the lack of trades. ( I love trading alot, or at least I used to) I have been following systems that trade 1 time a day. And have gotten accustomed to trading only once a day, more then that and I need a day off LOL.
Anyways, when you said to use to Value of the SAR to determine the stop loss, everything pulled back into place. However, for my trading I will be focusing on only on 1-4 markets, and really only 1 GBP/USD. After doing some back-testing on GBP/USD I have dropped my old system and will concentrate on GBP/USD only right now and build profit through money management. If I can obtain similar results to back-testing I will be thrilled. My Back tested results for anyone that is interested are from Jan 2006 to current:

Jan-Dec 2006 3895 pips 325pip Avg/month
Jan-August 2007 3048pips 381pip Avg/month
Current run up +322 pips :slight_smile:

This was definately enough information to get me to dump my old systems. I am waiting to jump into next GBP/USD reverse. Again, Thank-you so much!!!:slight_smile:

163

Hey SpacePip:

It’s only a pleasure - and the thanks is very much appreciated.

I’ll tell you that after all of this there is one thing that is REALLY bugging me:

Since 7 August 2007 (as stated before) my Capital Gain was around 159% as of yesterday afternoon before market open (and I can tell you that between last night and this morning that percentage is probably over the 180% mark).

When I was still ‘floating around’ and trying to get direction a couple of months ago I asked one or two brokers what their traders (they all have traders for their managed accounts) aim for - hoping that their info would ‘force’ me to take profits at a certain point as this has always been my downfall - and both of them basically told me that they aim for around 1% per day. Now I’m not sure what that equates to over a period of a month but I’m pretty sure that it’s nowhere near 180% or thereabouts.

Why is this worrying me? Well - my profits so far seem to be too good to be true. Either that - or I have indeed found the ‘Holy Grail’ of ‘systems’ (which unfortuantely I doubt very much). Of course the possibility also exists that the traders at the brokers are indeed making FAR more than 1% per day and keeping the rest for themselves. Quite frankly I don’t have the answer.

I have tried this ‘system’ three times now and all three times have turned (a very good) profit - that’s a 100% success rate. How many times do I have to do this to prove to myself (and everyone else for that matter) that it is indeed a ‘system’ and not just ‘being in the right place at the right time’? Get my drift?

Admittedly I have never (on all three occasions) let the whole thing run to maturity i.e. just keep going and following Parabolic SAR ‘to the letter’ and wait until I have performed at least three or four stop and reverse actions on all of the positions and then check the results - I’ve taken profit when I could not stand the idea of losing THAT much money if I’m wrong about all of this - so I suppose I have not ‘really’ proved this ‘system’ as yet. Also - to be brutally honest - my debts have climbed and climbed since I started trading - so although these HUGE profits are great - at the moment - they are ‘**** in the ocean’ and I suppose that’s another reason why I don’t let the trades run to ‘prove’ this ‘system’.

I keep thinking to myself - what if the value of the USD goes ‘totally pear shaped’ - what would happen then? Then I realise that even if this happened - I’m not any single currency ‘heavy’ if you know what I mean - if this happened - the other related currencies would make up for this (I think) and I may not make HUGE profits but I’d be making profits nonetheless.

Again: the pshycology of trading comes into play - and you realise just how badly trading for a living can affect you. I mean - you’re not happy when you’re losing money - and you’re not happy when you’re making money!!! This goes against human nature and is a total ‘mind ****’!

I’ve also been asked why, if this is working so well, am I giving it away to everyone. The first reason is that I hope to save anybody new to trading the pain and anguish that I’ve been through over the past couple of months due to my losses AND (of course) the more people following the same system at the same broker will of course help my (and their) cause i.e. if EVERYONE is buying USD and selling GBP then it becomes a self fulfilling prophecy does it not? Good for you. Good for me.

[B]Of all of the messages that I’ve posted in this thread the answer to the above questions are probably more important than anything else - so any [/B][B]input, advice, or just general comment, would really be much appreciated.[/B]

Regards,

Dale.

164

Just a quick one guy’s… Is there anywhere an indicator for Metatrader for the PSAR that will email us when the dot appears. I am just thinking it would be easier than manually checking up to 40 pairs. If this does prove to work in the long run it would work with an EA quite well. Then we could leave it running whilst we are on the beach in Malibu:D

165

My personal experience tells me that MACD

is quite a lagging indicator…

i wonder anyone prefer to use the stochastic or RSI ?

166

here is a couple audiable alerts for parsar not email.

Parabolic_Alert.zip (2.41 KB)

167

Dale,

I just wanted to give you a thumbs up on the ides and the system you are testing, I never really used the PSAR but after reading and doing a little backing testing i can see what you mean by multipul positions. I enjoy reading your posts and comments and look forward to learning more.

Thanks

168

here is a interesting indicator for parsar, its a multi timeframe set of bars you can set them to any of the tfs.

#Parabolic 4TF.zip (1.78 KB)

169

Spacepip and others,
Thanks for your info. Have a question. In doing your back testing did you :

Follow money management procedures ?
What was your starting capital ?
How many lots were you trading. ?
Which markets and pairs did you include in youe backtest.

What software do you use for backtesting and any sugestions on a backtesting/ strategy testing software for non-programmers?

The beauty of this PSAR’s strategy is the simplisity and preciseness of it’s entry and exits. Are there any similar indicators? Building upon this firm base of PSAR’s one could I presume add other indicators that would prevent one from entering a sideways market. In so doing, one could maybe get a better system. Keeping in mind that PSAR’s is the base.

Another similar type of indicators is the Chandelier Stop. It would be an interesting and maybe economically beneficial exercise if this could be similarly backtested to see how it compares with your PSAR backtest.

This is a most interesting and active thread. Thank you dpaterso for your insightful idea and to all others for your contribution.

170

Hello - everybody - nice to see some new names here.

Thanks for the posts and comments and Metatrader Custom Indicators.

Keep them coming.

By the way - for those of you that don’t know (just for interest sake) do you know that the ‘standard’ OsMA Indicator that comes with Metatrader is ACTUALLY (the same as ‘classic’ MACD)? I didn’t know that (only found out a couple of weeks ago). The default settings are identical to MACD and basically when the Oscillator crosses the zero line it is exactly the same thing as when the ‘classic’ MACD line crosses the MACD signal line! Take a look. On the occasions that I’ve used it I find it’s sort of ‘cleaner’ i.e. you ONLY have the Oscillator in front of you and not the lines - it’s become easier for me to use like that.

And it’s only a pleasure (updating this thread).

Regards,

Dale.

171

Hey byculla:

What is the ‘Chandelier Stop’? Nice name - but I’ve never come across it before.

Edit:

You know - it’s funny - I’ve been meaning to post this comment for the past couple of weeks now: Why does NOTHING every happen on a Monday? Have you ever noticed how quiet things are market wise on Mondays? Nothing happens! It kills me - and - if I could calculate the statistics of all the bad trades and losses I’ve made in the last couple of months - I’d be willing to bet that I opened all of the losing positions on a Monday! The crazy thing is - all my life I’ve wanted a job where my work week started on a Tuesday i.e. longer weekend. Now I’ve found one - and it p****s me off (on a Monday)!!!

Regards,

Dale.

172

Google it and you will get all the info. It appears to be a bit tighter than PSAR but only backtesting it will either confirm or deny this.

173

Hey Dale,

Would you tell me how much you have money on that account where you have 40 pairs open? If you have in that account (if I did understand it right) over $30 000 profit(and you have made it in since beginning of august, if I’m correct), I think thats s***loads of money!!

and really I’m happy for you!:slight_smile:

I’m currently working this with 15 currency pairs. With my platform you can see the pips that you have made, so I can post (if anyone wants to know) the pips I’ve made, like on a weekly basis, starting next friday.

But anyway congrats Dale, you’ve really earned it and hope that I can make same kind of money than you someday

this might be THE longest post that I’ve ever wrote in any forum

174

Thank you Dale for your informative response. Your time and experience with this “system” (And I also believe it is a system) is greatly appreciated! :smiley:

175

I’ve noticed that on the daily chart the stops are around 150 - 200 pips. So trading 1 lot you’d be risking $1,500 - $2,000 per trade on the EUR/USD. What if you only have a $10,000 - $15,000 account size?? The maximum I’d ever want to risk per trade is 5%. I know you could use smaller lot sizes, but a lot of Forex brokers that allow less than 1 lot take the other side of your trades. I don’t want to trade with a broker that’s against me on every trade. I wanted to use TradeStation but they allow no less than 1 full lot per trade since they aren’t taking the other side. What other options are there for someone that doesn’t have a $100,000 account??

176

Byculla, as far as my part of the question that I can answer:
Jan-Dec 2006 3895 pips 325pip Avg/month
Jan-August 2007 3048pips 381pip Avg/month
Current run up +322 pips

I only Manually Back-tested the one pair that I plan to trade GBP/USD.
No money management was applied, only pip trade results.
Largest Loss -188 pips
Largest Gain an incredible 1,380 pips from 4/5/06-5/19/06
Record 24 wins- 13 Loss
Avg. Win 329 pips
Avg. Loss 69 pips
Results obtain using an MT4 that starts new day at 5pm EST (New York Time)

177

Looking over my charts. With the previous post. It looks as if the EUR/CHF I listed wasn’t the Parabolic SAR. The others were. To me, it seems as if a perso is going to place a trade that will run over night As this one would. That he should only place the ones that would show a positive rollover? I am new at this.

178

Hi folks.

dundee:

Put it this way: the cost of a 100 000 lot size varies between (at the moment from highest to lowest) $1360 (highest - EUR/SEK) to $359 (lowest - NZD/CAD). The margin cost (used) of the current 42 (sorry - mistake - edited) pairs is around $21K which represents approximately 28% of my capital if I’ve done the calculation correctly. Foolish? Maybe? Is it working for me? Yes! Remember also that this is a highly leveraged account and I would NEVER risk this percentage of margin on a single pair. Once again - I think that’s why this is working for me (with Parabolic SAR of course).

newbietrader:

Your calculations are quite right.

As far as brokers trading against you is concerned:

I’m of the opinion (now - and it’s taken me a long time to learn this) - that this thing of people (traders) being worried about a ‘broker that trades against them’ is not valid - at least not on the longer time frames. Even if you are trading with a broker that ‘trades against you’ you’ll only be vulnerable (in my opinion) if you are trading very short time frames and basically trying to ‘scalp’ the market. I mean to say - a broker does not determine the price of an instrument - the market does (give or take one or two pips and the broker’s spread) - so - even if your orders are ‘slipped’ (which does NOT happen at Delta but DOES happen at my other ‘main’ broker) - if you are only trading the longer time frames like the daily charts - so - you might lose a ‘few’ pips on order execution - but in the long run - there is nothing that they can do UNLESS they ‘spike’ prices and ‘hunt’ stops and stuff like that on a regular basis - but - again - in order for them to make it worth their while - on the longer time frames - they would make it far to obvious because the severity of the ‘spikes’ and ‘slippage’ necessary for them to score on the trade would give the game away - ON THE LONGER TIME FRAMES!!! On the shorter time frames it’s very easy to cover up this practice because a far smaller ‘spike’ is needed and that can always be explained away by the broker’s dealing desk. That’s WHY (at least it’s one of the main reasons) I keep banging on about daily time frames and longer. Believe you me - I’ve been down this road - and it’s cost me more money than I had at the time - and it does not work - especially if you suspect that your broker may be messing with you.

What I’m saying to you is that is does not matter that your lot sizes have to be smaller when you first start out - it’s the % capital gain that counts at the end of the day - and if you’re trading the longer time frames - once again - who cares if the broker is paying your profit out of their pocket or not - if they’re doing this - then they had better be prepared to pay up - they are only supposed to be making money on commissions / spreads - nothing more - nothing less. If you’re in any doubt about your current broker - and only trade forex pairs - open an account at Delta Stock (and no - I still don’t get anything from them for referring people - believe it or not - their referral program is not up and running yet - but - I’ll tell - that once it is - I’ll be the first to sign up)!!!

Regards,

Dale.

179

jw44:

With Parabolic SAR on the daily charts - you have no option but leave trades overnight IF you are trading the daily charts. Once again - bear in mind - that the interest that you pay or receive depends on the pair and the direction of the position on that pair and - if you’re trading enough pairs - the difference between what you pay and what you receive will be negligable IN THE LONG RUN / LONG TERM.

Actually - the more questions I answer - the more apparent that it becomes - even to me - that trading shorter time frames - has very little - if any - benefit at all - and - for the most part - is just a recipe for disaster - there are too many variables at play on the shorter time frames - and - this begs the question: are you here to trade - or are you here to make money? When I started - I wanted to trade for a living - I lost BIG TIME!!! Now - I want to make money - and guess what!!! What I’m saying is that for the first couple of months I HAD to be opening and closing positions ALL THE TIME otherwise I did not feel that I was ‘trading’ - and - as you probably all know by now - it (almost) wiped me out financially. Since I started realising that just because I’m not clicking my mouse every five minutes to try and make a quick buck - I’m still trading - the difference is that now it’s paying off. I still find it EXTREMELY difficult to not do this (I sit and watch my positions just about all day every day) BUT I don’t touch them until whatever ‘system’ or indicator I’m using tells me to. Conquering this ‘I must make a trade every two minutes of the day’ mindset is probably the most difficult thing I have ever had to overcome in 42 years and the moment I got this into my thick skull (my bank balances - or should I say overdrafts at the time - went a long way to getting this into my thick skull) - things changed. I know that anybody new to this is keen and excited and just wants to ‘dive in’ and make money. Come to think of it - thinking back - I don’t know where this idea or mindset came from in the first place. I think that once you start realising that you are ‘investing’ in the market and not ‘trading’ the market - you’ll be good to go.

Wow - I don’t know where all that came from!!!

Regards,

Dale.

180

Hey everyone.

I’m new with the forex.

I’ve tried to write an Expert Advisor using the PSAR (I’m coding in MQL4).
But when I backtested it, it made huge losses. I used the visual mode too to check if it was doing what I wanted and it did.

So, I’ve been wondering if I didn’t get the strategy exposed in this thread wrong ?

Here’s what I’ve “programmed”.
-On a daily chart-
When a first-dot appears up (or down), I sell (or buy).
Once the point changes side, it closes the sell (or buy) position and open a buy (or sell) position.
The EA always works with only one position open.

If someone could help me out, I’d be o’ so grateful.

I hope I’m not too rude coming out of the blue to lay out my EA’issues and that my English was understandable…

181

Hi [email protected]:

It sounds like you’re on the right track.

I’ve attached a (Metatrader) graph for you - just to be sure.

Regards,

Dale.

mt4 psar.jpg700×525 67.3 KB